G20 agriculture ministers’ meeting

Opening speech by Nicolas Sarkozy, President of the Republic¹
Paris, June 22, 2011

Who would have believed, when the G20 met for the first time in Washington, that these meetings would lead us three years later to address the topic of agriculture?

However, to rebuild global capitalism is not only to change the way in which it operates, it is also to make the needs of peoples and human activities once again a central focus for its priorities. Agriculture is the world’s primary activity; agriculture is the first response to the vital needs of the population. For those who still have any doubts as to this, recent events provide dramatic proof of the urgency of ensuring that the agricultural sector is central to our action. Since the beginning of the year, 44 million human beings have sunk into poverty, since the beginning of the year, in countries that are in danger at every moment of destabilisation due to food riots.

For too long now we have been content to say that agriculture is one parameter of global growth among others. When agricultural crises occurred, due to lack of consensus, to lack of courage, lack of courage as well, reports were written, the necessity was expressed of reflection on the issues – later, invariably later. In actual fact, never. Today it is time to act. Agriculture must be restored to its rightful place in a world economy which is meaningful once again, a world economy that creates value for all and shares it, an economy that respects the work of small farmers and drives sustainable growth.

The lives of billions of people around the world are at stake; the balance of your societies is at stake; the preservation of our natural resources is at stake.

Rocketing commodity prices are endangering the global recovery. They can plunge whole populations into famine and poverty. They will lead to riots if we do nothing. Urgent action is needed now. We must act, act together if we are to avoid another agricultural and food crisis for the world.

That is why the French presidency of the G20 wished to draw on all the driving forces of global agriculture, looking beyond the G20 alone: from the United Nations General Assembly to the Davos Economic Forum, from enterprises in the agricultural and agrifood sectors to the 48 States gathered together by Germany on 22 January last, from international organizations to the farmers of 70 countries who met in Paris last week.

That mobilization must not lead us to forget the primary responsibility, that of the governments of the G20. It is your task, as agriculture ministers, to put forward the action plan that will guide all the efforts to come.

Faced with the financial crisis, the G20 demonstrated its ability to relaunch the world economy and go on to institute new regulatory controls. Regulation is not a dirty word. A market with no rules has ceased to be a market. What we were capable of doing for financial markets, we have a duty to do for agricultural markets.

The countries of the G20 represent 65% of all agricultural land, 77% of global production of cereals and 80% of world trade in agricultural products. The countries of the G20 have immense weight in global agriculture, and for that reason their responsibility for the future of global agriculture is also immense. We cannot say, you cannot say: it is the fault of somebody else. It is our responsibility, and now, not tomorrow, but now.

Yes, I know that the present crisis is complex. If it were enough to say that problems are complex in order not to deal with them, and if we have to give up dealing with complex problems, then you might as well spend your time sightseeing in Paris, because all problems are complex by their very nature, but if we analyse what happened in 2008, and what is happening today, we can see clearly what the main limits of our present system are.

We all know that agricultural production is insufficient to meet demand. I would like to get this idea across in the media of the entire world: global production is insufficient to meet demand. And it is going to get worse. In order to feed the nine billion people who will be on the planet in 2050, world agricultural production will need to increase by 70%. But over the last 20 years it has been rising at no more than 1.5% a year – or half the rate of the preceding 30 years. So we should have no fear of each other. Add up the agricultural production of all our countries and we will still not satisfy global demand. We’re all in this together.

This requires the mobilization of every agricultural sector, in Africa, in Asia, in the United States and in Europe, through the CAP. It is a mobilization that we need to start as of now because it is now that shortages are already beginning to make themselves felt.

Take the example of wheat. At this point in the year we already know that the balance will be precarious between expected production and forecasts for global consumption driven by India and the countries of North Africa. The stocks available to supplement production are inadequate, and there is a risk that the production of the main exporters will be much lower than in previous years, in the United States due to the floods in the Midwest and in Europe because of the drought.

If we are to produce more and better, we must reinvest in agriculture.
We must help the poorest countries develop their own agriculture and seek to ensure that the commitments given at the Rome Summit and the L’Aquila Summit are finally fulfilled.

We must also encourage research and innovation through programmes of international cooperation.

We must improve infrastructures that allow production to be transported and stored. Many harvests of cereal crops are destroyed because they have not been stored in the right conditions.

The second limit we find ourselves up against relates to the lack of information on agricultural markets. Agricultural markets are the least transparent of all the world’s markets. Is there a country that wishes to defend such opacity? Everyone works in their own specific area. All of us work in our own areas and nobody has a comprehensive view of the prospects for production and consumption or even the situation with regard to stocks.

The only data available are those of the US Ministry of Agriculture, and Europe must make up for time lost where this is concerned. This lack of transparency fosters price volatility. The price of a metric ton of wheat has doubled in six months: from €140 last July, to €280 in February 2011 and falling back to €225 today. Is that a properly functioning market? Can anyone explain to me how demand could have changed so much in the space of a year?

Volatility has dramatic consequences for everybody, producers and consumers, developing and developed countries. I have in mind here European farmers who feel the impact of price volatility all the more for the fact that for many years the Common Agricultural Policy (CAP) protected them from fluctuations in world markets. I am also thinking of African farmers; indeed, that is why I am pleased that NEPAD and the African Union were invited to the G20.

Volatility, let us be absolutely clear about this, is a scourge. Volatility is a scourge for small farmers and for consumers, as well as for the stability of States; volatility is a threat because it endangers agricultural productivity for years to come: what farmer can commit himself to major investment when he is at risk of losing a third of his income the following year? What businessman would risk investing in such an unstable market?

What is France proposing? To do for agriculture what we have been able to do for oil: set up a joint database to give all concerned access to comprehensive, reliable and regularly updated information. I salute the undertaking of European Commissioner Ciolos to make available, from this autumn, European data on the main categories of agricultural production.

The extent of the current crisis is also explained, as we must acknowledge, by our own limitations, and in particular by our inability to coordinate our actions to avoid crises. We must learn the lessons of the dramatic events of 2008 in which everybody took decisions unilaterally, without coordination. We must avoid protectionist reflex reactions; we must agree on a code of good practice prohibiting export restrictions for the purchase of emergency food aid. That requires the definition of common rules for dialogue, and perhaps even the creation of a forum that would enable mutual consultation by the major actors in agricultural markets in order to respond quickly, immediately a crisis arises.

We would be well-advised to decide to mobilize humanitarian reserves in the most vulnerable geographical areas. The idea is not to build up public stocks with the intention of stabilizing prices! That does not work. We know that is impossible.

But we must at least act to ensure that when food and humanitarian crises occur intervention by international organizations such as the WFP does not contribute to rising prices due to their purchases of large volumes on markets at the most critical time! Such a situation may seem absurd, but unfortunately it is something that has been observed all too often.

We must experiment in Africa with different ways of using emergency reserves in order to learn from the most successful experiments in the field. Alongside this, insurance must not be a tool reserved only for the richest.

On all these topics I know that the work done by the World Bank can provide input for the proposals that you will make with your colleagues, finance ministers and development ministers.

And to conclude, the present crisis is a reflection of the limitations of predatory capitalism. Since 2008 we have been witness to massive purchases of land: for example, in 2009 alone, proposed land purchases exceeded 50 million hectares, an area equal to that of France, 70% of which related to Africa alone. Given this, how can African agriculture ever develop for the benefit of local populations? How could it? We must implement a code of good practice for land purchases.

Agricultural commodities are now among the underlyings of financial derivatives, whose use is spreading uncontrollably. The financialization of agricultural markets, even if it does not explain everything, is a contributory factor in price volatility and food insecurity for the most vulnerable. It opens the door to the manipulations – I say again, manipulations – we have seen in recent months. We are all aware of what has happened in the cocoa market. Let me remind you that a market which isn’t regulated isn’t a market, it’s a lottery, a lottery in which fortune smiles on the most cynical, instead of rewarding hard work, rewarding investment and rewarding the production of value.
That is why the French presidency of the G20 has expressed a wish to see financial regulation extended to markets for agricultural derivatives. It is crucial for you to be able to work alongside the finance ministers because intelligent and effective regulation must inevitably involve cooperation between the regulators of physical markets and the regulators of financial markets.

Reinvestment in agriculture, transparency in agricultural markets, coordination between states, regulation: such are the watchwords of the action plan you have defined with Bruno Le Maire, who has my thanks and my complete confidence. It is my wish that you should be able to adopt it tomorrow. Ladies and gentlemen, the eyes of the whole world are upon you, you, the ministers of agriculture. This is a major step in building a new global agriculture.

Ministers,

The success of the G20 summit in Cannes depends on you. This is the first time you have gathered together. This is the first time that agriculture has achieved the status of a priority for world growth. In remedying the problem of volatility in agricultural markets and ensuring food security for the world of today and tomorrow, it is the entire edifice of capitalism that we are in the process of rebalancing. By adopting this plan, you can change not just the lives of a billion small farmers but the very evolution of capitalism to ensure that it, capitalism, finds real meaning once again: to contribute to the development and wellbeing of human beings.

The whole world is counting on your decisions, on your action – the whole world cannot wait./.